Arnold & Porter LLP

Editors

Get Updates via E-mail

Disclaimer

The content of this blog is intended for informational purposes only. It is not intended to solicit business or to provide legal advice. Laws differ by jurisdiction, and the information on this blog may not apply to every reader. You should not take, or refrain from taking, any legal action based upon the information contained on this blog without first seeking professional counsel. Your use of the blog does not create an attorney-client relationship between you and Arnold & Porter LLP. Click here to view additional disclaimer language.

Copyright 2008-2015 Arnold & Porter LLP

Legislation

June 25, 2015

The US House of Representatives has decisively taken the lead in the two-step dance that could update and reinvigorate the nearly 40 year old Toxic Substances Control Act (TSCA). Makers and processors of chemical substances and producers and distributors of consumer products have been monitoring legislative action on TSCA modernization efforts for nearly a decade. Suddenly, amendments to TSCA appear to be on an incredibly fast track even as we lurch into the hazy days of summer on Capitol Hill.

TSCA gives EPA broad authority to regulate chemical substance, including the products into which they are blended, including consumer use products. Legislation has been repeatedly introduced in both legislative chambers reflecting Congress’ and the Administration’s mutually held belief that the Agency’s authority under TSCA has been under utilized by EPA due to the burdensome procedures established in the nearly 40-year old law.

In an overwhelming 398-1 vote taken during a suspension bills session June 23, the House overwhelmingly passed the TSCA Modernization Act of 2015 (H.R. 2576). The bipartisan bill was reported out of committee unanimously earlier this month on the promise that certain fixes would be made prior to the floor vote. Key changes made following mark-up were engineered by the bill’s chief sponsor, Illinois Republican John Shimkus, and New Jersey Rep. Frank Pallone Jr., an indispensable Energy and Commerce Committee Democratic co-sponsor. If the Senate takes similar action on its own TSCA reform bill later this summer, the first significant piece of bipartisan environmental legislation in decades could be sent to the President for signature later this year.

On April 28, the Senate Environment and Public Works Committee marked up S. 697, the version of TSCA reform legislation that grew out of a bill originally co-sponsored by the late Senator David Lautenberg (D-NJ) and Louisiana’s Senator David Vitter (R-La.). The Lautenberg-Vitter bill was considerably modified to appease the concerns of certain states and environmentalists prior to its reintroduction by Senators Tom Udall (D-NM) and Vitter, who also renamed the bill to honor the late Senator Lautenberg. Curiously, Senator Boxer opposes the Senate’s own bill, and, having gained little traction for her own TSCA reform bill, now proclaims her support for the House bill.

The Senate bill represents a more comprehensive overhaul of TSCA, making amendments to or replacing virtually every section of the current law, while the House version makes more targeted amendments to the risk assessment and risk management provisions of TSCA. Nevertheless, as the debate over the bills has matured, amendments have been adopted that have increased the similarities in the House and Senate legislation.

Of interest to the makers of consumer products, both bills specifically address EPA’s authority to use TSCA to regulate finished products. Both the House and Senate bills would amend the provisions that provide EPA authority to evaluate chemical substances already in commerce and simplify the procedural hurdles EPA must meet to impose restrictions on substances to mitigate unreasonable risks to human health and the environment. Persistent and bioaccumulative chemicals would receive special attention under both bills. The bills would establish timelines that require EPA to take regulatory actions within a specified period after commencing and completing a safety assessment for a chemical substance. Moreover, the House and Senate versions would enable a chemical manufacturer to request that EPA undertake an assessment and reach a determination concerning the safety of the current and intended uses of a substance -- provided the Agency’s costs for doing so are paid by the manufacturer. The bills would modify the current law so EPA could release confidential information on chemical substances to state and local agencies for purposes of state regulatory and enforcement programs. The legislation under consideration in the Senate would, like the House bill, impose what are likely to be significant new fees on the chemical industry to offset EPA’s costs of its chemical risk assessment and management program. The bills both provide for partial preemption of state chemical regulatory actions, although both grandfather in state laws enacted before August 2015.

The Senate has not scheduled a date for a floor vote on its own bill, but a vote is expected before the summer concludes.

June 16, 2015

Local governments are increasingly seeking to regulate consumer products -- everything from toys and cell phones, to soda and pharmaceuticals. But hardly before the ink can dry on these ordinances, business groups sue to block them, relying primarily on principles of free speech, federal preemption, and interstate commerce.

Most recently, CTIA – The Wireless Association sued Berkeley, California over its May 26, 2015 cell phone ordinance. The law requires cell phone retailers to provide consumers with a notice that if they carry the phone in a pocket or under their clothing while the phone is on, they may exceed the federal guidelines for exposure to radio frequency radiation. The CTIA lawsuit alleges that the statement is “compelled speech” that is “not only scientifically baseless and alarmist, but . . . also contradicts the federal government’s determination that cell phones approved for sale in the United States, however worn, are safe for everyone.”

CTIA has been successful challenging similar—albeit broader—ordinances in the past. When San Francisco passed a “Cell Phone Right to Know” ordinance requiring cell phone retailers to inform customers about measures to reduce exposure to radiation, CTIA sued in federal court on First Amendment and preemption grounds. The district court denied the bulk of CTIA’s federal preemption and free speech while requiring San Francisco to revise its fact sheet, but the Ninth Circuit, in an unpublished opinion, reversed, citing FCC regulations and noting that the agency “has established limits of radiofrequency energy exposure, within which it has concluded using cell phones is safe.” The court also noted that “San Francisco concedes that there is no evidence of cancer caused by cell phones” and that therefore the fact sheet cannot be said to be “purely factual and uncontroversial.” Accordingly, San Francisco was forced to drop the ordinance.

Cell phones aren’t the only products being regulated by local governments. Recently, Albany and Westchester counties in New York State passed local laws banning certain children’s products and apparel allegedly containing toxic chemicals such as lead and mercury. In Albany County, toy industry groups have already filed suit in federal court (with Arnold & Porter as lead counsel), arguing that the ban is preempted by federal law.

And the county in which Berkeley is situated initiated a trend in local regulation by requiring pharmaceutical manufacturers to establish programs for taking back unused products and educating consumers not to throw them away. PhRMA, the trade association of pharmaceutical companies, sued to block this ordinance, but once the Ninth Circuit rejected that challenge, other localities -- including San Francisco -- began implementing similar programs.

San Francisco soon might find itself in another legal battle over its regulations, as supervisors this week approved an ordinance that would require warnings on print advertising for products such as sodas with over 25 calories per 12 ounces. The label would read: “WARNING: Drinking beverages with added sugar(s) contributes to obesity, diabetes, and tooth decay. This is a message from the City and County of San Francisco.” The beverage industry has already indicated that it might sue if such a measure ultimately becomes law.

Industry groups have demonstrated that they are willing to fight these local ordinances, and—at least in CTIA’s case—their lawsuits have seen some success. But local governments appear to learn from past failures and are attempting to tailor their messages, no doubt in anticipation of legal battles ahead.

May 28, 2015

Continuing a national trend to enact or bolster state data breach notification laws, two more states signed new amendments into law this month that expand notification requirements for businesses that experience a data security breach. In addition to increasing notification obligations, both states also refined the scope of data that will trigger those obligations. In addition, Virginia established a new governmental organization to collect and share information on cybersecurity threats and took action to encourage statewide adoption of technologies that will enhance financial data security.

Washingtonamended its data breach notification law to impose new notification requirements on businesses exposed to data breach. The amended law requires businesses to notify affected individuals within 45 days after the breach is discovered whenever the breach is reasonably likely to subject consumers to a risk of harm. It further specifies the information that must be included in customer notifications, including basic information to help consumers secure or recover their identities, such as the contact information for consumer reporting agencies. Businesses must also notify the State Attorney General within 45 days of discovery whenever a data breach affects more than 500 Washington residents. Finally, the amended law expands coverage to include hard copy data (in addition to computerized data) and removes a blanket exemption for encrypted data, clarifying that a breach of encrypted data can trigger notification requirements if the encryption key or other decryption tools are acquired during the breach. The full text of Washington’s law as amended, which becomes effective in July 2015.

North Dakota amended its security breach notification law to require any person or business that experiences a breach of its security system affecting more than 250 individuals to disclose the breach to the State Attorney General. The amendment narrows the definition of “personal information” as it pertains to employee data. Now, a breach that compromises an individual’s employee identification number will only give rise to notification obligations if the breach also affects “any required security code, access code, or password” accompanying the employee identification number.

Virginia rolled out several initiatives in April and May to enhance security protections for financial data and to address cybersecurity threats, becoming the first state to address these issues in response to the President’s executive orders in October 2014 and February 2015. On April 20, Virginia announced the creation of the first state-level Information Sharing and Analysis Organization (ISAO), a new governmental organization intended to facilitate the collection and sharing of information related to cybersecurity threats and attacks. This news comes on the heels of multiple high-profile data breach incidents and just two months after the Commonwealth of Virginia established the Virginia Cyber Security Commission to develop expertise in the area of cybersecurity. In addition, Virginia’s governor signed the “Securing Consumer Transactions” directive on May 5, which encourages adoption throughout Virginia of advanced electronic payment security technologies, including “chip-and-pin” authentication features. This directive instructs the Commonwealth’s technology and finance secretaries, treasurer, and comptroller to (1) update the state’s main purchase card program to include chip-and-pin technology by the end of the year, and (2) develop a plan to enhance the security features of merchant and prepaid debit card programs by October 1, 2015. The governor’s press release announcing Virginia’s ISAO is available here.

With these latest developments, data breach prevention and cybersecurity continue to be top priorities among states looking to address privacy concerns raised by their constituents. With new data breaches coming to light on a regular basis and a renewed national attention to consumer privacy, we can expect more legislative action on the horizon.

April 22, 2015

For years the more conscientious among us have faced a dilemma every time we check out: “Paper or plastic?” Which is better for the environment? Do I even need a bag? And ironically, now that more of us are shopping online and receiving daily shipments of cardboard and Styrofoam instead of carrying things home in a bag, local governments have started making the checkout decision for us.

Long the bane of environmentalists, plastic bags are banned or restricted in hundreds of localities across 37 states. Twenty-two state legislatures have considered similar legislation, with California (no surprise) being the first to enact a plastic bag ban. That law -- plus the state’s referendum process -- has made California ground zero for the battle between plastic bag manufacturers and environmentalists.

Caught in the middle are the retailers who have to comply with all of these laws. Some laws allow a retailer to charge a nickel for a paper bag. Others set the minimum at a dime. Some require charging for any type of bag. Some set requirements for sale of reusable bags, which must meet certain strength requirements. Some require that paper bags be made of recycled paper. Some require the funds collected to be segregated for certain purposes. Some impose a tax on plastic bags. Some require in-store recycling stations for plastic bags.

In California, this bewildering diversity of regulation across 126 (and counting) localities prompted the California Retailers Association and the California Grocers Association to join with environmental advocates and support a statewide law with uniform requirements. That law was scheduled to be phased in starting July 2015 but is now suspended pending a statewide referendum on the November 2016 ballot.

The American Progressive Bag Alliance, funded primarily by manufacturers of plastic bags, obtained enough signatures on a petition to overturn the law. Under California’s referendum process, that suspends the law until the voters have their say. So until then, California retailers must comply with all the various local laws. And Californians can now look forward to another round of entertaining and annoying political ads and dinner party discussions over a rather different right to choose.

The situation is reminiscent of menu labeling laws, where a similar dynamic of local, then state, regulation played out. National restaurant chains, facing an array of differing city and county rules for displaying calorie counts on their menus, supported uniform state legislation in California and then a federal law (which is just being implemented) that preempts differing state and local laws. It remains to be seen whether compliance with varying state and local requirements becomes such a headache that businesses -- who would prefer no regulation -- settle for uniform regulation.

Of course, the preemption battle can also play out in the other direction, as a recent New York Times article noted. The Governor of Texas -- who is concerned that his state is being “California-ized” -- has supported legislation preempting localities from regulating plastic bags in any way, prompting an outcry by local officials.

But for now, at least, fewer Texans and Californians will face this momentous choice at checkout. And store managers around the country will need to stay on top of hundreds of local requirements.

April 16, 2015

In the midst of substantial legislative attention to data security and privacy in states across the nation this year, two states took concrete action this month to clarify and expand notification requirements following a data security breach. In addition, the state of Connecticut opened a new agency department within the Office of Attorney General to handle data security and consumer privacy matters.

Montana and Wyoming each amended their data security breach notifications laws to redefine what constitutes personally identifiable information, altering the types of data that would trigger a notification requirement. Notably, both states now include health and medical record information within the category of personally identifiable information. In addition, Wyoming has removed certain employment data from the definition, including a person’s place of employment and employee identification number, and added other types of data, such as login and password information that would permit access to an online account. A separate bill amended Wyoming’s law to require companies to provide “clear and conspicuous notice” to individuals affected by a data security breach, including at a minimum a general description of the breach, the approximate date of the breach, actions taken to guard against future breaches, and advice for how to remain vigilant in protecting against identity theft. Lastly, Montana’s law now requires companies to notify the state attorney general’s Consumer Protection Office in addition to affected individuals, and insurance entities must also notify the state’s insurance commissioner. The full text of Montana’s law as amended, which becomes effective in October 2015, is available here. The amended provisions of Wyoming’s law go into effect in July 2015 and are available here and here.

Connecticut created a new permanent department within the Office of the Attorney General this month titled the Privacy and Data Security Department. Formed to continue the work of an interdisciplinary Privacy Task Force appointed in 2011, the new department will work exclusively on investigations and litigation related to data security and consumer privacy. The announcement from State’s Attorney General George Jepsen is available here.

These actions demonstrate a continued effort among select states to protect the personally identifiable information of their constituents, especially in the absence of a national data breach statute from Congress. Although Congress is currently considering a sweeping bill to establish a national standard for data breach notification, until its enactment companies storing personally identifiable information must navigate a complicated landscape of state law to ensure compliance. As of yet, 47 different state data breach notification laws remain in force.

June 13, 2014

. . . then we’d know where in the world she was thanks to geolocation information.

Many apps on mobile devices collect information about their users’ whereabouts and movements. This information can make apps more useful (such as navigation apps that provide directions) or more fun (such as social networking apps that tell users when friends are nearby). Sometimes, though not always, app users might choose to post geolocation information about themselves, such a Facebook status update that tags the location of a night out with friends, a child’s graduation, or a family vacation. This geolocation data, however, can reveal private information about individual consumers and, worries the Federal Trade Commission (FTC), could be misused without a user’s knowledge or consent.

On June 4, 2014, the Senate Judiciary Committee’s Subcommittee for Privacy, Technology and the Law held a hearing to discuss the recently-proposed Location Privacy Protection Act, S. 2171, sponsored by Senators Al Franken (D. Minn.), Chris Coons (D.-Del.), Elizabeth Warren (D.-MA), Richard Blumenthal (D.-CT), Richard Durbin (D-IL), and Dianne Feinstein (D.-CA). This legislation would generally prohibit mobile apps from collecting, storing, or sharing users’ geolocation information without a user’s informed consent. The witnesses included Jessica Rich, the Director of the FTC’s Bureau of Consumer Protection, who testified about the FTC’s ongoing efforts to protect consumers’ privacy in this area.

In her testimony, Director Rich praised the Location Privacy Protection Act as “an important step forward” in the protection of consumers’ private data. She laid out the three main benefits of the proposed Act: 1) providing a definition of “geolocation information” that is consistent with other online privacy rules; 2) requiring entities to disclose the fact that they collect geolocation information from consumers in advance; and 3) requiring certain companies to gain affirmative consent from consumers before collecting geolocation data or disclosing geolocation data to third parties.

She emphasized the highly personal nature of geolocation information, noting that it could reveal many aspects of a person’s private life, such as whether they visited an AIDS clinic, a psychiatrist’s office, or a place of worship. Director Rich testified that in the “wrong hands” this information could be ripe for abuse. For example, some businesses might collect consumers’ information and sell it to third party advertisers. In other cases, even if a business has its customers’ consent to collect and store geolocational data, if the business’ files are vulnerable to data-breaches, the consumers’ private data might be at risk.

Director Rich also discussed a few of the FTC’s recent enforcement actions focusing on the misuse of geolocation data, such as the agency’s recent settlement with Snapchat. In addition to several other privacy issues (we discussed the matter here), the FTC alleged that Snapchat transmitted its users’ geolocational data in violation of its stated privacy policy. In the settlement, Snapchat agreed no longer misrepresent its privacy and security policies and to implement a comprehensive privacy program. Finally, Director Rich highlighted the Commission’s outreach efforts, workshops, and reports aimed at educating businesses and consumers about geolocation data. We have written about these efforts here and here.

The proposed Location Privacy Protection Act and Director Rich’s testimony should serve as a reminder that government enforcers and privacy advocates remain focused on protecting consumers’ privacy. Businesses -- in particular mobile app developers -- should review their privacy policies and ensure that they are adequately protecting their customers’ geolocation information.

May 09, 2014

Vermont has become the first state to enact a law requiring labeling of foods containing genetically modified organisms (GMOs). Starting in 2016, this new law will require farmers and food manufacturers who sell their products in Vermont to label foods that have ingredients enhanced by genetic engineering (GE). The law, which was passed on April 23 and signed into law on May 8, is the first to require such labeling without any conditions.

Food industry groups have vowed to challenge the law in court. And taking them at their word, Vermont lawmakers created a $1.5 million legal fund to pay for any “costs or liabilities” of implementing the labeling requirements. Vermont is no stranger to having to defend its unusual consumer advertising regulations. The state previously faced litigation over similar labeling requirements for milk and mercury, which dairy farmers and electrical manufacturers challenged on Commerce Clause and Freedom of Speech grounds.

The Vermont GE labeling law applies to fresh produce sold in grocery stores and packaged foods sold at retail. Under the law, all GE fresh produce must be labeled ̶ or sold in a bin or shelf that states ̶ “produced with genetic engineering.” Processed foods that contain one or more GE ingredients must be labeled “produced with genetic engineering,” “partially produced with genetic engineering,” or “may be produced with genetic engineering.” Vermont has not yet provided guidance for when each label is to be used. Additionally, the law forbids GE foods or foods with GE ingredients from being labeled as “natural,” “naturally made,” “naturally grown,” or described similarly. The labeling law does not apply to restaurants, nor does it apply to meat or dairy products made from animals that consumed GE feed or feed with GE ingredients.

The passage of the Vermont law may provide momentum for similar initiatives in other states. Although voters in California and Washington have rejected ballot initiatives to require GMO labeling, two other states, Connecticut and Maine, have already passed laws that will require labeling of GE foods once a certain number of neighboring states adopt similar measures. Twenty-three other states reportedly have active bills that would require labeling of GE foods or foods with GE ingredients. Most notably, a bill in the the New York State Assembly recently passed the committee stage, the farthest any such bill has progressed. Federal lawmakers recently proposed legislation that would preempt state laws and provide uniform regulations for GE labeling, potentially assuaging the food industry’s concerns of a state-by-state regulatory patchwork. Still, the Vermont law represents a major victory for consumer groups supporting GE labeling laws.

Scientists use genetic engineering to enhance the genes of crops. This can make them, for example, more resistant to pests, better able to withstand droughts, and otherwise hardier. An estimated seventy to eighty percent of packaged foods in the US contain some kind of GE ingredient. Though the FDA has stated for more than two decades that there is “no basis for concluding that bioengineered foods differ from other foods in any meaningful or uniform way,” consumer and environmental groups have campaigned for labeling requirements for such ingredients because of concerns that the long-term effects of GE foods, a recent addition to the food supply, are unknown.

One prominent Vermont-based food company, Ben & Jerry’s, supported the legislation. As noted on their website, the transition to non-GMO ingredients is “complex.” Whether the rest of the food industry will need to undertake this analysis for all of their food products by January 1, 2016 may be determined in court.

April 17, 2014

US Representative Mike Pompeo (R-KS) joined with Representatives G.K. Butterfield (D-NC), Jim Matheson (D-UT), Marsh Blackburn (R-TN), and Ed Whitfield (R-KY) in introducing H.R. 4432, the “Safe and Accurate Food Labeling Act”: a bill to provide a unified, federal response to questions about labeling requirements for genetically-engineered foods and food ingredients (GEs). GEs are present in about 80 percent of the food in the United States. The bill has the support of major players in the agriculture, food, and biotech industries, who maintain that GEs are beneficial to consumers and are necessary to global food security. The bill has also raised concerns among consumer safety organizations, who point to surveys suggesting that over 90% of Americans support GE food labeling.

This proposed bill would require the FDA to review the safety of any new GEs entering the market. Currently, many GE developers voluntarily consult with the FDA before marketing their products, although there is no requirement for them to do so. The FDA does not conduct independent research as part of this consultation, but rather reviews a safety assessment prepared by the developer, along with relevant scientific literature and agency records. Under the proposed law, this practice would be codified, and if the FDA determined that the GE was safe for consumption, the product would not need any special labels or warnings. The bill would permit voluntary labeling indicating whether foods are or are not GE.

This law would also preempt the patchwork of proposed or enacted state laws addressing the issue by requiring mandatory GE labeling. Most notably, lawmakers in Connecticut and Maine have approved mandatory labeling laws, but the laws require additional states to pass similar legislation before going into effect. Similar measures have been defeated in other states, at a cost of millions of dollars to industry members opposing it. Dozens of other states have pending bills or ballot initiatives that would require labeling of GEs.

GE labeling has often been at issue in litigation where plaintiffs complain that marketing bioengineered foods as “natural” is “false or misleading,” a violation of the Federal Food, Drug, and Cosmetic Act (discussed in detail here). These claims have been the basis of numerous lawsuits, but with little success. In 2013, federal judges in the Northern District of California and the District of Colorado declined to rule on the issue, instead referring the cases to the FDA under the primary jurisdiction doctrine in order to avoid usurping the FDA’s regulatory and interpretative authority.

The FDA has long held that it has no basis to conclude that most GEs differ from other foods in any meaningful way, or that, as a class, foods developed by the new techniques present any different or greater safety concern than foods developed by traditional plant breeding.

Another proposed bill, one that would require labeling of GEs, has also been introduced in the Senate and House.

March 19, 2014

A lawsuit by the Missouri Attorney General over California’s unique egg regulations may hatch into something much bigger -- and eventually restrict the scope of California’s expansive Safer Consumer Products regulation (aka Green Chemistry).

As a result of Proposition 2, enacted by California voters in 2008, egg-laying hens in California will soon be living the good life. As of January 1, 2015, they must be provided with room to stand up, lie down, and extend their wings, which is supposedly impossible in widely used conventional cages.

But after the law was expanded in 2010 to prohibit the sale of eggs in California from out-of-state farms that do not comply with Proposition 2’s requirements (see A.B. 1437), Missouri’s Attorney General cried foul. He filed a lawsuit on behalf of Missouri egg farmers, who sell one-third of their eggs to California consumers, challenging the constitutionality of that law. Nebraska, Oklahoma, Alabama, Kentucky, and Iowa also joined the complaint in the Eastern District of California. They allege that the California regulations violate the Commerce Clause of the United States Constitution because “the bill’s true purpose was not to protect public health, but to protect California farmers from the market effects of Prop 2.”

California has sent mixed messages regarding the law. The legislature stated its purpose was to “protect California consumers from the deleterious, health, safety, and welfare effects of the sale and consumption of eggs derived from egg-laying hens that are exposed to significant stress and may result in increased exposure to disease pathogens including salmonella.” But a legislative committee originally stated its intent was to level the playing field for California egg producers, and the Governor’s message on signing on the bill crowed about its benefits for “California egg producers and animal welfare” – without mentioning the law’s supposed health and safety benefits. The court will need to unscramble these motives. If the court finds that California sought to discriminate in favor of the economic interests of its own citizens, then California will have to show it had no other viable alternative to protect its consumers from supposedly unhealthy eggs produced out of state – a high bar. But even if the court treats the law as non-discriminatory, California won’t get over easy. Instead, the egg-producing states can challenge the law if its burden on interstate commerce – the cost of renovating chicken coops producing over five billion eggs a year – is “clearly excessive” in comparison to its “putative local benefits.”

The outcome of this lawsuit could have wider implications for California laws that seek to condition the sale of goods in California on compliance with state regulations. Most important, California’s Green Chemistry (Safer Consumer Products) regulations authorize wide-ranging restrictions on consumer products sold in the state, regardless of where they are produced. Implementation of the regulations may be subject to challenge based on their extraterritorial reach. As we reported here, the agency recently announced the first three sets of “priority products” to be regulated. Manufacturers of the identified products will be required to engage in an analysis of whether a safer alternative to the identified chemicals could be used, including analysis of the environmental impacts of the manufacturing process, regardless of whether they occur in California. The agency will then take regulatory actions, which may include labeling requirements, use restrictions or bans, end-of-life waste management, and “[a]ny other outcome the department determines accomplishes the requirements.”

For decades, California requirements such as Proposition 65 and Volatile Organic Compound limits for personal care products have set de facto national standards for consumer products based on claimed health and environmental impacts inside California. We soon will see whether the interstate commerce clause will clip California’s regulatory wings or whether the Missouri AG will end up with egg on his face.

December 11, 2013

UPDATE 2 (1/16/2014): Off again, on again. After citing a procedural error and withdrawing its proposal to require reporting of arsenic, cadmium, formaldehyde, and mercury in children’s products in mid-December, Maine's Department of Environmental Protection (DEP) revived its rulemaking notices on Christmas eve. A hearing is now scheduled for January 14, 2014, and the comment deadline is now January 31, 2014.

UPDATE (12/16/2013): Maine says not so fast. On Wednesday, December 11, 2013, we reported that Maine’s Department of Environmental Protection (DEP) had proposed to require reporting of arsenic, cadmium, formaldehyde, and mercury in children’s products. On Friday, December 13, DEP withdrew its rulemaking notice, citing a “procedural error.” We will provide a further update if and when the rulemaking is revived.

_____________________________________________________________________

Companies that make or distribute children’s products containing arsenic, cadmium, formaldehyde, or mercury should take note: The Maine Department of Environmental Protection (DEP) is proposing to require companies to report the presence of those four chemicals in concentrations above de minimis levels. Assuming the proposed rules become final, arsenic, cadmium, formaldehyde and mercury would join two other chemicals--bisphenol-a and the chemical class nonylphenol and nonylphenol ethoxylates--as so-called “Priority Chemicals” under Maine’s Toxic Chemicals in Children’s Products law.

What are the de minimis levels?

If a Priority Chemical is intentionally added to the product, the proposed reporting rules would apply only if the chemical is present at concentrations above the “practical quantification limit” (or PQL), meaning the concentration that can be reliably measured by a laboratory under routine operating conditions. The PQL can vary from chemical to chemical, and product to product. Although the proposed rules do not explicitly say so, the law under which they were issued also requires reporting of a Priority Chemical that is a contaminant (i.e., not intentionally added) at levels above 100 parts per million.

What’s covered?

The rules would apply to manufacturers, importers, and distributors of the following children’s products intended for use by a child under 12 years of age: bedding, childcare articles, cosmetics, craft supplies, footwear, games, jewelry and embellishments, safety seats, occasion supplies (e.g., costumes and party favors), personal accessories, personal care products, school supplies, and toys.

What’s next?

The Maine DEP will hold a hearing on the proposed rules on December 17, 2013, and comments are due by January 10, 2014. If the proposed rules go into effect, reports from manufacturers will be due 180 days following the effective date. Maine would then be the second state to require public reporting for these substances. The four proposed rules are available for download here.

November 11, 2013

Fresh off the Government shutdown and the fight over the debt ceiling, a few in Congress have turned their attention once again to their curious but dogged effort to amend the Lacey Act, the United States’ oldest wildlife conservation law. The anti-Lacey campaign began in earnest with the high profile Gibson Guitar case (involving, among other things, the seizure and forfeiture of illegal wood), and was the subject of two House subcommittee oversight hearings earlier this year, in May and July. In prior posts, we told you about Congressman Rick Crawford’s recent bill and Congressman John Fleming’s recent bill. We’re back to tell you about the latest -- and perhaps the most misguided -- attempt to amend the Lacey Act we’ve seen so far.

The Lacey Act prohibits the trade in illegally harvested fish, wildlife, and -- thanks to a 2008 amendment -- plants and plant products. The 2008 amendment provides that plants and plant products imported into the United States must be accompanied by an import declaration that contains certain information about the type of plant, its country of origin, the quantity of the plant, and the value of the importation. As is true for any new regulatory requirement, it takes time and effort to adjust. As a result, the agency charged with implementing this requirement, the Department of Agriculture’s Animal and Plant Health Inspection Service (APHIS), has been gradually phasing in the declaration requirement and working with industry to help ease the transition.

Most of the complaints about the declaration requirement point to the burdens involved in gathering the information that the declarations require. Those are fair complaints, and APHIS no doubt will have to continue to work with industry to make sure that the declaration system is implemented in a smooth and efficient way. But the most recent proposed amendment, introduced on October 23, 2013, by Congressman Andy Harris, H.R. 3324, appears to do nothing at all to address those concerns, and instead would change the system in a way that would undercut law enforcement and render the declaration requirement all but useless.

October 15, 2013

Sure, the debt ceiling crisis, the government shutdown, and
the tension in Syria and Iran seem to be grabbing all the headlines. But that apparently won’t stop some folks in
Congress, who still seem to find time to propose amendments to the Lacey Act,
the United States’ oldest wildlife conservation law. This time, the proposed amendment appears
carefully crafted to address a problem that doesn’t really exist, and actually
would create a whole lot of problems no one wants. OK, we know that blogging on the Lacey Act at
this time may seem a bit out of tune with the central topics of the day. But the proposed amendments draw out our
inner Alfred E. Neuman,
so we decided to take the bait. Besides,
we previously said we’d keep you up on the efforts to amend the Lacey Act. So here goes.

The Lacey Act prohibits the trade in illegally harvested
fish, wildlife, and -- thanks to a 2008
amendment -- plants and plant products.
Since 2008, the Act has been the focus of media and congressional
attention due to high-profile cases like Gibson
Guitar (involving, among other things, the seizure and forfeiture of
illegal wood), and the recent search by Federal investigators of Lumber
Liquidators’ offices. A House
subcommittee held several oversight hearings earlier this year, in May
and July,
and this renewed interest in the Act has inspired several proposed amendments
that are well-intentioned but ultimately unnecessary and fraught with
unintended consequences. We told you about Congressman Rick Crawford’s bill in
a post
just a few short weeks ago. Now we’re
back to talk about the bill Congressman John Fleming introduced last week.

Congressman Fleming’s bill, H.R. 3280, the
“Lacey Act Clarifying Amendments Act of 2013,” would exempt from the Lacey Act any
plants imported into the United States before May 22, 2008 (the effective date
of the 2008 amendment) and “any finished plant product the assembly and
processing of which was completed before May 22, 2008.” While the proposal might initially seem like
a technical bore, it in fact would have a number of significant unintended
consequences that no one really wants.
We see three principal problems with the draft bill.

First, it’s unnecessary.
It seems that the main idea behind the amendment is that it’s
fundamentally unfair to throw someone in jail if she somehow ended up with
illegal, pre-2008 Amendment wood or wood products, but didn’t know the stuff
was illegal. We agree! But here’s the rub: innocent owners already can’t be prosecuted under the current version of the Lacey
Act. To be clear: if you innocently come to possess illegal
wood, you are innocent under the Lacey Act.

So, why the proposed “fix?”
The amendment comes out of all the hysteria that followed the Gibson
Guitar case. Folks started panicking
over an idea that musicians traveling with older musical instruments would be
stopped at the border on suspicion of violating the Lacey Act. But the federal agencies charged with
enforcing the Lacey Act have made their intentions clear: musicians don’t need to worry--the Feds are
going after intentional traffickers in illegal wood, and citizens traveling
with musical instruments have nothing to be concerned about. Furthermore, in
the extremely unlikely event that a truly innocent owner’s pre-2008 wood is
seized or forfeited, she always can file a “petition for remission,” asking the
agency to review the particular circumstances and return the wood.

The second problem is that the bill is likely to result in
an unfortunate unintended consequence:
significantly complicating law enforcement. The amendment would encourage people
intentionally trafficking in stolen or otherwise illegal wood products to claim
their products were imported or assembled prior to 2008. Disproving such false claims may require
complicated and costly technical analyses -- and may in some instances be
impossible. By allowing
illegally-harvested wood to remain in circulation, the proposed amendment could
make it much more difficult for the Feds to catch actual criminals. It would create a huge loophole and make it
easy to launder illegal post-2008 wood.

Third, a pre-2008 exemption could help criminals and harm legitimate
businesspeople. Wood stolen before 2008
is still stolen wood. The amendment
would excuse illegal activity by allowing someone who knowingly imported
stolen, illegal, or endangered wood in 2007 to profit from its sale. Excusing illegal activity does not square
with our legal system’s obligation to protect the rights of the property owners
whose wood was stolen. And permitting
continued trade in illegally-harvested, pre-2008 wood would increase the supply
of illegal wood in the market, depressing prices and hurting law-abiding
businesspeople whose prices are undercut by criminals.

The Lacey Act has been helping to provide important
protections for legitimate American businesses and legal goods for American
consumers for over a century. Congressman
Fleming’s bill may be well-intentioned, but it could do more harm than good and
undermine the goals of the Lacey Act and the competitiveness of legitimate
American businesses.

We’ll continue to keep you posted about these
issues. To read more about the Lacey
Act, click here
and here.

October 08, 2013

Marking
only the second time that California’s onerous Proposition 65 has been
substantively amended in over 25 years, Governor Jerry Brown on October 5,
2013, announced that he has signed into law AB227, a bill aimed at reducing
“bountyhunter” litigation against small businesses who operate restaurants,
bars, parking garages, as well as other premises that permit smoking. The
bill takes effect immediately.

We
summarized a substantially similar version of the bill in our prior blog post.
The citizen enforcement provision of
Proposition 65 has now been amended for businesses that fail to provide
warnings to consumers in the following specific situations:

exposure
to alcoholic beverages sold for onsite consumption;

exposure
to chemicals in food or beverages that are prepared and sold on the premises
primarily intended for immediate consumption on or off premises, provided the
chemicals are not intentionally added and were formed by cooking necessary to
render the food palatable or to avoid microbiological contamination;

exposure
to environmental tobacco smoke caused by entry of persons (other than
employees) on such premises where smoking is permitted; and

exposure
to chemicals known to the state to cause cancer or reproductive toxicity in engine
exhaust, to the extent the exposure occurs inside a facility owned or operated
by the alleged violator and primarily intended for parking noncommercial
vehicles.

The law now gives these businesses 14 days to comply with the
warning requirements before an enforcement action can be filed. It also
sets the fine at a one-time payment of $500 (indexed for inflation). This
provision can only be invoked once with respect to a violation arising from the
same exposure in the same facility or on the same premises.

Private enforcers of Proposition 65 who target businesses in
these situations have to follow special procedural requirements for giving
notice, including informing the businesses of their rights under this
provision. To invoke the protections of this provision, a business likewise must follow certain procedures set out
in the statute.

With only $125 per violation available to the bountyhunter, and
no provision for attorneys fees, the law significantly reduces the financial
incentive for bountyhunters and their attorneys to target businesses in these
circumstances. In recent years, restaurants in particular have been
targets of such suits covering such commonly found chemicals in food as
acrylamide in coffee, PhIP in grilled chicken, and PAH’s in flame-grilled
burgers.

Broader Reform Remains Uncertain

As we also reported previously, Gov. Brown in May 2013 sought
much broader reform of Proposition 65 by convening a group of stakeholders for
intensive discussions on amending the statute. Hampered by the need to
obtain two-thirds approval of any changes, the participants (who included Arnold
& Porter’s Trent Norris) were unable to come to
a consensus on reforms before time ran out in the legislative session in early
September. The proposed reforms were modest and generated little
enthusiasm among business interests, and
specific opposition was formally voiced by interests in the plaintiffs’ bar who
opposed revisions aimed at fostering judicial review of attorneys’ fees awards
that are agreed to in proposed settlements.

The Administration has said it will continue to consider
revisions to the warning provisions of regulations administered by the Office
of Environmental Health Hazard Assessment, following a public workshop held in
July 2013. Additional
discussions on possible legislative reforms also appear possible in the next
legislative session.

July 30, 2013

For over 25 years, Proposition 65 has plagued businesses in
California. The law gives private
“bounty hunters” an incentive to find even small violations, resulting in
millions of dollars in settlements and a plethora of
signs in parking garages, hotels, restaurants, and other businesses. If one of those signs isn’t posted, or falls
down, it can cost the business owner a pretty penny.

After hearing complaints from business owners for many years, members of
the California legislature, led by Assemblyman Mike Gatto (D-Los Angeles), are poised
to enact a modest step toward reforming the law in favor of certain businesses. AB 227 would allow certain businesses such as
restaurants, bars, hotels, and parking garages a one-time 14-day grace period
to post warning signs after they receive a bounty hunter’s notice of alleged
violation. The bill has unanimously passed the California Assembly and two Senate
Committees and appears headed for the Governor’s desk before the end of the
legislative session this fall. It will
take effect immediately once enacted into law.

July 18, 2013

If you remember when software was
mainly sold on a disk inside a big box, you may also remember lawsuits
claiming that this violated state “slack fill” requirements -- as if software
were sold by volume. Those frivolous
suits were eliminated by a 1997 California law, but in recent years the issue
has resurfaced for sellers of cosmetics, food, and other consumer products.

In California, as in every other
state, nonfunctional “slack fill” is banned:
sellers are of course prohibited from misleading consumers into buying
more than they are. But there are some
good reasons for having empty space in a package -- for instance, contents may
settle in shipping, or a package for a very small item needs to be bigger in
order to deter shoplifting or even to allow the package to display required
information. And -- as with software --
empty space is not necessarily deceptive.
Deciding where to draw the line has not been an issue in most of the
country, and consumer
advocates are certainly policing practices they believe are
questionable. But, perhaps not
surprisingly, litigation has ensued in California.

July 16, 2013

The makers of energy drinks and consumers alike should be on
alert to potential new developments in the regulatory environment.

American Medical
Association (AMA). While the Food and Drug Administration continues
its investigation into the safety of energy drinks, the AMA —the largest
association of physicians in the US — announced
that it supports a ban on the marketing of energy drinks to children under
18 years of age. The AMA noted that
these products have become increasingly popular in recent years, particularly
with high school and college-aged youth.
According to the American
Academy of Pediatrics, more than one-third of teens consume energy
drinks. On June 18, 2013, during its
annual meeting, the AMA voted to adopt a new policy with regard to the
marketing of energy drinks to individuals under the age of eighteen. The AMA has warned that with high levels of caffeine,
sugar, and other stimulants and additives, energy drinks can cause heart
attacks, convulsions, agitation, anxiety, and insomnia and can lead to obesity
and diabetes. A recent
survey by the U.S. Department of Health and Human Services found that
between 2007 and 2011, emergency room visits related to energy drinks
doubled.

Food and Drug Administration (FDA). The AMA’s announcement follows a chain of
events leading to increased pressure on energy drink manufacturers. The deaths of fourteen-year-old Anais
Fournier in December 2011 and nineteen-year-old Alex Morris in July 2012 both
led to lawsuits alleging that the deaths were caused by the consumption of
energy drinks. In October 2012,
the FDA announced it was investigating
reports of five deaths that may be associated with Monster Beverage Corp’s popular
energy drink, Monster. The FDA
has been conducting ongoing investigations into the role of energy drinks in
reported cases of death or illness potentially related to energy drinks. Monster and Rockstar, Inc. (another maker of
energy drinks) have decided in the past few months to market their products as
beverages rather than as dietary supplements, as they had been doing
previously. Among other regulatory
impacts, the two companies will no longer be required to report adverse events,
such as deaths and injuries, potentially linked to their products.

Federal
Legislature. A number of lawmakers issued statements
expressing hope that the AMA’s decision would have some influence over energy
drink manufacturer. Sens. Richard J. Durbin of Illinois and Richard
Blumenthal of Connecticut, and Rep. Edward J. Markey of Massachusetts released
a report, What's
All the Buzz About?, after investigating 14 commonly-sold energy
drink brands. The report criticizes the
marketing practices of energy drink makers, accusing companies of using social
media advertising, as well as the sponsorships of events and athletes that
cater to teenagers, to appeal to children and teens. Some lawmakers in Washington, D.C., have spoken
out in support of the AMA’s decision to push for a
ban on the marketing of energy drinks to minors.

Local
Governments. Local governments have also been taking
steps to limit the sale and marketing of energy drinks.

In Suffolk County, New York, lawmakers
recently passed legislation limiting the marketing of energy drinks to minors,
as well as prohibiting the sale of drinks in the county’s parks. The new law bans certain marketing techniques
including providing free drink samples to minors.

San
Francisco’s City Attorney, Dennis Herrera sent a letter to Monster late last
year asking for evidence supporting its claim that the energy drinks are
safe. On April 29, 2013, Monster filed a
lawsuit against Mr. Herrera, alleging that his efforts to regulate the sale of
energy drinks in the City of San Francisco were preempted by the federal Food,
Drug and Cosmetic Act. Mr. Herrara
responded with a lawsuit on behalf of the people of California, filed May 6,
2013, alleging that Monster had engaged in unfair, deceptive, and unlawful
business practices.

The
American Beverage Association, an industry trade group, opposes the AMA’s
decision. A spokesperson
for the industry noted that many energy drink companies voluntarily
post caffeine amounts on product labels and include packaging advisories,
warning that energy drinks are not intended for children or pregnant women.

While the likelihood of significant federal
legislation relating to the marketing of energy drinks passing both houses of
Congress in the near future is low, the FDA could impose additional
restrictions on energy drink makers without Congressional approval, which some
lawmakers are urging. The
April 2013 Congressional report emphasizes that energy drink makers adhere to
different, sometimes inconsistent, marketing, labeling, and ingredient
disclosure requirements, with some brands classifying their products as dietary
supplements and others as conventional beverages. These two product types carry different
federal requirements under the Federal Food, Drug, and Cosmetic Act. For example, according
to the FDA, food additives cannot be used in
conventional food and beverages without FDA approval, while dietary ingredients
require no FDA approval for use in dietary supplements.

Energy drink makers and consumers should be
attentive to the forthcoming conclusions from the FDA’s energy drink
investigation, as that inquiry may awaken a new regulatory focus on the
industry.

March 20, 2013

By now, you’ve probably heard that the Bloomberg
administration experienced a significant setback on last week when a state
judge invalidated
the New York City Mayor’s attempt to limit the serving size of sugary drinks
sold in the city. The so-called “soda
ban” -- or, as Bloomberg calls it, the “Portion Cap Rule” -- was heavily opposed
by the soda companies and relatively unpopular
among New Yorkers.

In the decision, Justice
Milton Tingling of the State Supreme Court was persuaded by arguments made
by the petitioners seeking to enjoin the implementation and enforcement of §
81.53 of the New York City Health Code. Justice Tingling first found that the regulation violates the
constitutional separation of powers in New York State, as governed by the Boreali v. Axelrod. The court noted that
“[t]he Rule would not only violate separation of powers doctrine, it would
eviscerate it.” Id. at 35.

Justice Tingling went on to hold that the administrative
regulation was “arbitrary and capricious because it applies to some but not all
food establishments in the City, it excludes other beverages that have
significantly higher concentrations of sugar sweeteners and/or calories on
suspect grounds, and the loopholes inherent in the Rule, including but not limited
to no limitations on re-fills, defeat and/or serve to gut the purpose of the
Rule.”

While the Bloomberg administration decides whether to appeal
the decision, legislators in Mississippi are doing their best to ensure that a
regulation like the Portion Cap Rule never sees the light of day in their
hometowns. Last Tuesday, the Mississippi
legislature passed a bill,
known as the “Anti-Bloomberg
Bill,” barring counties and towns from enacting rules that require the
posting of calorie counts, cap portion sizes, or prohibition of “consumer
incentive items” such as toys in kids’ meals.
The bill is expected to be signed by the Mississippi governor Phil
Bryant.

We have previously
reported on the struggles of implementing government regulation on food,
including the FDA’s recent national menu labeling and calorie content
rules. It remains to be seen whether the
apparent failure of Mayor Bloomberg’s initiative is a mere hiccup in an
increasing trend of government intervention in public health, or whether the
decision (and measures such as those potentially implemented in Mississippi)
signals a stronger backlash against such government regulation.

The
VPPA requires the express consent of a consumer before sharing information
about his or her video-viewing habits. The VPPA was originally designed to protect customers of
brick-and-mortar video rental shops, and did not contemplate today’s
environment of abundant consumer-driven information sharing. Prior to the amendment, “video tape service
providers” (which includes providers of on-line video services) could not share
a consumer’s viewing history without obtaining that consumers consent each time the information was
shared. This made it difficult to share consumer
video-viewing information with social media platforms, even if the consumer
wanted such sharing to occur.

With
the enactment of the VPPA amendment, consumers more readily may provide their
consent for the disclosure of their video-viewing information. The amendment does the following:

It
clarifies that consumers may give their consent on-line.

It
allows consumers to give consent in advance, for up to two years or until they
revoke their consent, whichever is sooner.
It also provides, however, that consumers must have the alternative of
consenting on a case-by-case basis.

It
requires that the consent be distinct and separate from any other agreements or
policies.

It
requires that the consumer be given a clear and conspicuous opportunity to
withdraw his or her consent, either with respect to any and all sharing of
their video-viewing information, or on a case-by-case basis (for example, not
sharing that they viewed a particular video).

In
order to share its consumers’ video-viewing information, a video tape service
provider will need to take care in complying with the new consent requirements. Among other things, a video tape service
provider will need to: (a) draft an appropriate consent, separate from the
other agreements and policies governing the video service or site; (b) present
consumers with all appropriate information when their consent is requested
(such as with whom their information will be shared); (c) give consumers the
option to withhold consent, or only provide consent in a given instance; (d)
provide consumers a clear method for withdrawing consent; (e) track the
expiration and withdrawal of consents; and (f) immediately cease sharing once
consents have expired or been withdrawn.
Noncompliance could be costly, since the VPPA, in addition to imposing
criminal liability, provides for a private cause of action and damages of at least
$2,500 per person (plus attorneys fees and costs). Nonetheless, providers of video services have
welcomed the VPPA amendment as providing them new opportunities for integrating
video-viewing information with social media platforms where few existed previously.

June 05, 2012

Those of you who enjoy sipping on a 20 oz. soda at Yankee Stadium may soon be forced to downsize. Citing an increasing population that is overweight, New York City officials announced on May 31 their intention to pursue a ban on certain supersized soda and other sugary beverages sold at restaurants, delis, food carts, movie theaters and sporting venues located in the Big Apple. The first-of-its-kind restriction, which must be approved by the City’s Board of Health, could go into effect as early as March 2013. Violators would face $200 fines.

The ban, which does not apply to supersized sodas or sugary drinks sold in convenience or grocery stores, and does not restrict the sale of supersized diet sodas, alcohol beverages, fruit juices, lattes or dairy-based drinks, has been hailed by supporters and roundly criticized by opponents. On the one hand, supporters claim that the ban will have an impact on the obesity problem and could pave the way for similar legislation throughout the country (much like Gotham’s 2003 ban on smoking in public restaurants). In stark contrast, fast-food and soda companies have issued statements criticizing the ban as “narrowly focused and misguided” and taking away the consumers choices “about the beverages they purchase.”

The City has leeway to implement laws that protect the public health and safety, so long as the laws could have an actual health benefit and are not arbitrary or overbroad. Given that the ban has not been approved by the City’s Board of Health, it is too early to tell if any legal challenges will be launched against the City’s ban, whether on grounds that the ban does not further public health or is otherwise arbitrary in its scope.

April 26, 2012

Right or wrong, scientifically-based or not, the labeling of genetically engineered foods (GE foods) - often, and erroneously, referred to as GMO foods - remains a topic on the mind of activists and legislatures across the country.

In October 2011, the Center for Food Safety (not to be confused with FDA’s Center for Food Safety and Applied Nutrition), and other nonprofit organizations, filed a citizens’ petition with the US Food and Drug Administration seeking mandatory labeling for foods made from genetically engineered crops. Similar groups launched a “Just Label It” campaign to garner support for the petition, and many nonprofit organizations asked their members to submit comments to FDA in support. Comments closed last month, and FDA recently stated that it hopes to complete its review and respond to the petition in the near future.

For nearly twenty years, FDA has repeatedly asserted that there is “no basis for concluding that bioengineered foods differ from other foods in any meaningful or uniform way, or that, as a class, foods developed by the new techniques present any different or greater safety concern than foods developed by traditional plant breeding.” The petition, yet again, seeks a new policy and labeling requirements. The FDA’s long-held position is that GE foods are not materially different from their conventional counterparts.